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Why GEOS Failed

J-Cast News takes a look at what brought about GEOS's bankruptcy and what's in store next. Here's a summary.

As is already known, G.communication will take over 70%, or 230 schools, of GEOS and close the remaining 99 schools.

In explaining how business went from bad to worse, GEOS executive Hitomi Suhara said that the collapse of Lehman Brothers (and the ensuing recession) resulted in fewer students. She said that GEOS was trying to cut 1.2 billion yen in costs (roughly $12.8 million USD) but was unable to do so due to the drop in revenue. A GEOS lawyer also said that the company had negotiated with its banks to extend loan repayments, but fewer students meant GEOS couldn't carry out its restructuring plans, and the company eventually ran out of money.

METI statistics show the drop in student numbers to be drastic. In February 2007, there were approximately 750 thousand students taking foreign language lessons. By 2008, the number was halved to 360 thousand. One factor in the decline is the kyuufukukin allowance to help people find work. It paid 40% of tuition fees up to 200 thousand yen. In October 2007, the allowance was cut to 20% or a maximum of 100 thousand yen. Then came the collapse of Lehman Brothers which forced many households to cut education expenses from their budgets.

From the ashes of the collapse of large eikaiwas smaller schools have emerged offering cheap lessons at around 8,000 yen a month. There are also Internet-based classes which are yet cheaper. While the large schools couldn't withstand the deflationary pressures on them, smaller schools are bound to take their place as the language market retructures.

There is the infighting at GEOS to consider. Management was split as to whether to file for bankruptcy, and ex-president Kusunoki has been adamant that the bankruptcy wasn't necessary to the point that he's trying to stop the bankruptcy and get his company back.

Whatever the problems within GEOS, they must have started long ago as the company went from accepting large, up front tuition payments to bankruptcy in the span of a couple of months. As the bankruptcy proceeds, it'll be interesting to see if what happened behind the scenes comes to light.

Comment: The first thing that came to mind was that J-Cast was equating the large schools to the dinosaurs. It's an apt comparison as the collapse of Nova and Lehman Brothers can be seen as extinction events that changed everything. There are new rules in play and the model of large schools charging everything up front is going the way of the dinosaur, making space for the small, furry schools to thrive.

You got to love the Japanese and how they always find a way to pass the blame off to a foreigner/ gai-jin about their screw up. "Lehman Brothers"? Give me a break. Interesting how they did not reference the fact that the Japanese economy has been stagnated for 20 years....Or how many of their Japanese businesses have taken a competitive hit due to Korea and Chinese out-pricing them. Nope, those evil white devils I tell you...

From the ashes of the collapse of large eikaiwas smaller schools have emerged offering cheap lessons at around 8,000 yen a month. There are also Internet-based classes which are yet cheaper. While the large schools couldn't withstand the deflationary pressures on them, smaller schools are bound to take their place as the language market retructures [sic].

Good

There are so many resources available for ESL students that there is no reason to pay exorbitant fees to overpriced and mismanaged conglomerates. It is clear to see that the old business model was due to fail. Hopefully, whatever form of ESL education spawns out of this will be more professional and pragmatic than what was available in the past.

All those gaijin buffers on the phone interviewing potential e-teachers, and all the Japanese managers constantly quoting how great it is to work for GEOS, promising careers, aspiring teachers...etc..etc all the while the senior level management was probably taking out risky bets on the market with companies like Leman Brothers, and expanding the company into foreign countries just to increase their market share, all the while charging high fees and counting on the passivity of the Japanese students, and the hierarchy and bureaucratic leadership of government ministries to continue increasing margins. And the little guy gets shit on again.

So, G-Communications took over 70% of the classes. Whoopdee-doo! They were more than likely instructed too by the government of Japan, and do not intend to give out any charity about and beyond what they are told to do.

I'd say screw them before they screw you because the game is rigged from the beginning with regards as to employment in Japan, English teacher working conditions, employer accountability, responsibility and the contracts you sign. If you even get a whiff of management change or anything fishy regarding your contract just WALK!

Lets hope someone or something pulls the plug on Japan Inc. before they are allowed to hurt and destroy anyone else.

I agree that these folks always seem to have some large, amorphis group, that cannot be collectively questioned or punished, to blame for their failures. Whether it's always the "dirty gaijin", I don't know about that.

why the fuck did they blame lehman brothers? that's a load of bullshit why the fuck would loads of investment banking gaijins be studying english at a bullshit eikaiwa like geos. Its totally absurd. Lehman bros. was just in tokyo so if that was the case why did the whole of geos go belly up that's the biggest amount of bullshit I've ever heard even the WMDs in iraq was more true than lehmn bros making geos go bankrupt. Geos went bankrupt because people have no many to pay 8000 yen to speak to some ugly fucking loser from oklahoma who couldn';t evne work at a taco bell back home for 50 mintues of his time to go through a textbook and ask questions. Japan is bankrupt there are no savings left anymore and the young generation doesn't want to save.

Well, I would agree that there are a lot of former GEOS teachers out there who certainly were not qualified to teach the English language. As for Taco Bell, I would venture that the fast food industry has better trained people than the fast English industry.

The above notwithstanding, I would not rule out the impact that the fall of Lehman Brothers has had on the world economy (including residents of the world like GEOS). By the way, I am willing to bet all my shares in GEOS (or all my monopoly money) that you are no investment banking expert.

Another way at looking at it is 75%+ of these companies, including GEOS, would not exist in the first place. When looking at it that way, everything just went back to zero.

The media loves to find one target to blame to sell their crap. Lehman was just part of a much more complex world. But look at Greece and how its government overspent it means on "social" programs and has blown up. Like GEOS, if you build your company or country on a house of cards cemented with bullshit, well. what do you expect?

3:42 Would you say it is just "former" GEOS teachers? I would say a lot of current ones, also...

It is a little bit stricter in Canada than it is in Japan, but that isn't saying much. All you need is your run-of-the-mill fine arts degree (because you could not get into anything else) and a couple of connections to teach in the country...TESL Canada is supposed to be a standard qualification, but not always at GEOS (shhh, do not tell Languages Canada that!). Worse are the GEOS Canada "managers"; more like glorified used car salespeople. All you need to be a GEOS manager in Canada is a philosophy/ fine arts/ basket-weaving degree from a second-rate (or third-rate) uni and some talkin'/ bs skills...

ALERT!: It is now making news that GEOS Canada and USA is officially up for sale!

Google Translation here:

GEOS Language Centre were presented from the United States.

NY In an email from the principal of GEOS There was a presentation on the operation of the future, let me introduce bon appétit.

ジオスのノースアメリカより公式の発表によりますと、 According to an official announcement from North America GEOS
ノースアメリカの学校は日本のジオスとは別の会社で運営していく事になる為、 GEOS schools in Japan and North America because it will be operated by another company,
通常の運営には変化はございません 。 There is no change in normal operation.
とのことです。 It was said.

GEOS Corporation in Japan recently filed for bankruptcy, with some of its assets taken over by G Communications, a separate Japanese company, and some of its assets being currently held by a court-appointed trustee. a separate Japanese company.

The ownership of the shares of the company in North America is currently held by a court-appointed trustee awaiting sale.

There has been no change in the legal or operating status of the companies in Canada and the United States,and we look forward to a rapid sale and to continuing to provide excellent services to our students and partners.

The comments from the anonymous Nova teacher were quite entertaining - he did so much bootlicking I'm surprised he was worried about getting reprimanded. He didn't mention how anyone who wouldn't transfer got fired, or how anyone G.com kept on got their wages slashed. It's nice he's earning as much as he ever was, but he couldn't have been getting that much in the first place or else G.com would have taken off at least Y50,000 a month without any prospect of raises to make up some of the loss. GEOS teachers, take heed. This is what you can expect.

The Australian newspaper reports in its Higher Education section today that overseas student enrolments last month are down 40%

"Overseas students down 40pc
Guy Healy From: The Australian May 12, 2010 1
OVERSEAS student applications plunged 40 per cent last month following "abrupt and rapid" changes to Australia's visa regime, the country's peak education agent warned yesterday.
The crackdown on student visas, coupled with uncertainty caused by the continuing delay to the priority skills list, could cost Australia at least $600 million in lost export revenue, IDP chief Tony Pollock told The Australian.

"Last month, there was a significant decline in applications from India, Vietnam and China. It's a concern," Mr Pollock said.

"If there's a 10 per cent decline over a full year - with each student adding around $30k to the economy - that would be a $600m shortfall, conservatively," he said.........................................."

Meanwhile migration pland are in limbo here:

"Painful wait for the priority list of skills
Guy Healy and Susannah Thomsett From: The Australian May 12, 2010
UNIVERSITIES, TAFE institutes and colleges are sweating on the release of the priority skills list likely to recast demand for their lucrative overseas student offerings and triggering an exodus home of large numbers of disappointed students.
But the delayed list from the Department of Immigration and Citizenship - aimed at decoupling education from migration - will come on top of a market correction that is distressing colleges and worrying universities in the $17 billion industry.

On the back of key enrolments figures, University of Melbourne migration visa expert Lesleyanne Hawthorne gave a big tick to the Rudd government's recent policy changes, saying they were "having the desired effect". The 13 per cent enrolment growth for universities during the past year was correcting the recent mass migration-driven shift to the vocational sector, she told the HES.

CQUniversity overseas student research director Paul Rodan said a slowing of growth at the bottom end of the market "would have positive potential implications". "It's not callous to be relieved that people who couldn't really afford to come may no longer come," he said."

Who cares? Australia should stop jacking overseas students for their hard earned cash.

Overseas students should save their hard earned cash and go to more established places for English learning in countries that have real industries and so don't have to make up an 'English industry'.

Countries that don't give substandard training to people who are paying big money for a second rate secondary education course or for 'universities' that not long ago didn't exist or are crap dressed up as 'higher learning'.

A lot of this 'industry' is an institutionalised scam. Hey, we haven't got any real industries in Australia anymore apart from mining, the service industry and our welfare system is too big and sucking up too much money. How the fuck do we pay for it and how the fuck do we get some quick money from people outside Australia?

The solution - getting all these people to spend money on mostly crap 'education' or 'training' and luring them by promises that they will be able to stay and get a good job in Oz after they've finshed their 'education' or 'training'. One problem with that is - don't believe the bullshit about great Aussie employment. Many, many Australians can't get good, full time work in their field or at all.

They rightly don't want increasing numbers of hairdressers, and on the uni qualifications front increasing numbers of overseas students with uni qualifications to compete for the shrinking pool of real jobs. Those from overseas who studied in Australian colleges, unis and the grabbag of places they were let into for stupidly expensive amounts of money were given bullshit guarantees that there are plenty of jobs to go around. Not so.

Increasing numbers of Australians can't get housing they would have before this 'education boom' (renting or mortgage) because of this 'industry'. It's been made worse because the current Rudd Labor Govt let overseas buyers buy houses/units/flats etc for their kids or relatives to come to Aus and study, pushing rents up crazily and cutting available housing for people who are Australian citizens.

Both overseas students and Aussie citizens have been fucked over by the elites. The more overseas students who go and get a real education for their money the better, and that means not in Australia whose Liberal (Conservative) and Labor governments told overseas students porkies to grab their money.

That will mean the end of these bastards who rip off people who don't know the system, the going to the wall of these secondrate 'education' institutions whatever they are, and relief for Australians who can't find housing and real jobs in their own country.

Oh and a small example of how much these places care about their students - the University of Victoria in Melbourne for example has male overseas students from Muslim countries but their overseas student support 'officers' are all female.

So to summarise your argument. If all the students stop coming it will free up houses for Australians and allow Australians employment in real jobs. Interesting economic theory. I do wonder what would pass your standards for a 'real' industry. Making cars? (Not very green!) Tourism (No -take up beds from Australians and create low paid jobs) IT? (No too capitalist and elitist) Banking and insurance? (Oops, bad joke post GFC) Ahhhhh. Maybe highly paid University research (Think again, they grovel and write papers for years before they get up to the top - and of course this does not generate export earnings) Maybe there are no real industries - actually maybe the world is a strange, exciting and imperfect place.